China’s Comeback? Why $JD Could Lead in 2025
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The infamous China trade… At the start of each year, there always seems to be hype around gaining exposure to the Chinese market through dual-listed ADRs. At the beginning of 2024, my former colleague that I sat next to was incredibly bullish on China (he is one of the best China traders I have come across). Every day, he’d come in pissed as his positions gapped against him. He’d reduce, only for them to end up closing strong and then he’d jam back in—just to get burned again. It was brutal, both on his P&L, and his mental state (lots of cussing, throwing headsets and monitors, and general chaos).
Eventually, he ditched the trade, felt immediate relief (a convo we had), and started crushing it in the momentum-rich market of 2024. A bit later, China set up and we were all bulled up. With a clear head, he jammed back in and absolutely crushed it— and also went on to have an epic year, as many of us did.
Now, in 2025, I am seeing something similar play out (I didn't see the initial trade he saw, but the second time around, it was clear to the both of us). Their market has been beaten down since March of 2021 and it "finally" looks primed.
The reality is, many mid and large-cap Chinese stocks are healthy companies: ton of cash, little to no debt, and enterprise values below their market caps as they continue to grow YoY. In other words, cheap!
One standout is $JD. On January 17th, it triggered on my overnight momentum filter for the overnight trade. Typically, this is a straightforward close-to-gap trade. But occasionally, these setups align with bigger-picture opportunities, like this one.
$JD is cash-rich, with an enterprise value of $44B and a market cap of $59B. When a company’s enterprise value is below its market cap, it can indicate being undervalued (just one data point)—though, with Chinese stocks, you have to take this with a grain of salt. Many avoid debt, so their book value often looks great even when there’s more to the story.
Technically, $JD looks really good. It’s breaking out of a recent range on elevated volume and is considered a momentum-rich name for this style of trade.
Additionally, after sharing my thesis with one of my coworkers at Stocktwits, he said
“It’d be the ultimate irony if Trump’s ‘hostile towards China’ policy coincides with their market ripping. Makes sense though, if we’ve already priced in tons of negatives and they turn out slightly less bad than expected—it would boost their markets.”
This was my thought as well. China has been a dumpster fire for years, but with Trump's commentary, it feels a bit capitulatory. At the end of the day, he follows trends and would gladly hop on the "China is great" bandwagon if they begin to lead. If you don't believe that Trump is a trend follower, just think back to a few weeks ago when he launched his own shit-coin (Trump Coin and Melania Coin).
Anyways, I’ve been digging into $JD over the past few days and everything under the hood seems to be "good". Growth is "fine", they’ve got a ton of cash to buyback stock if they choose to do so, and the entire Chinese market seems ready to lead in 2025. I wouldn’t be surprised to see $JD between $80–$100 by year-end, maybe even earlier which is what I am somewhat playing for.
Currently, I’m long from $39.90 after taking an initial loss on January 23rd when the trade ended up just going nowhere for a few days. I lost about $0.50/share initially but reentered about $0.50 higher. So, I’ve already given up a dollar on the trade, but I feel much better about it now.
At the end of the day, as always, I’m confident in the trade but perfectly okay with cutting it if it doesn’t act the way I see fit. I have a ton of experience trading dual-listed Chinese stocks with a good track record, and have a pretty good feel for when it's working vs when I need to get out of the way...
Anyways, that’s about it. In essence, $JD started as an overnight momentum trade, but turned into a higher time frame play as I believe the Chinese market will lead in 2025. Trump’s recent comments may have capitulated their market, and $JD’s enterprise value sitting below its market cap gives me confidence as they continue growing their bottom line.
We shall see!
Disclaimer: The content shared on this blog is based on my personal opinions and is intended for informational purposes only. It should not be taken as financial advice. Please conduct your own research or consult with a financial professional before making any investment decisions.
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